One of my duties as CFO is to take everyone’s contribution to the budgeting process and distill it into a presentation for our board of directors. Getting this presentation put together is never easy for anyone. Minor tweaks here and there or major shifts in strategy always seem to come at the last minute. But the team perseveres and a logical set of reports is built in support of management’s proposed strategies.

If the report presents the right data to support the strategic narrative, then you get rewarded with a unanimous vote to approve the budget as presented. When the narrative and the data don’t line up, you’re in for a long meeting. What could possibly get in the way of having the right data telling the right story? Plenty!

Let me take you on a journey. It’s a journey that starts fresh in our business every single day. Not just once each day, but over and over again. This journey involves the origins of data flying around your network, slowly getting categorized and harnessed into valuable management information. How ironic it was to open a fortune cookie while this article was being written to find this ancient proverb inside:

Technology is the art of arranging the world so we do not notice it.

It all starts the moment someone makes a reservation. A new set of unique data elements has just been created. When the guest arrives, pieces of the data get modified or updated, creating the platform for all sorts of extra data to join in. There’s a quick stop in the bar after a long flight, followed by a sandwich from room service and maybe even a PPV movie.

Within hours of checking in our guest has created several key pieces of information which will soon make their way to a variety of reports. There will be room revenue, room nights, food and beverage revenue, and other types of activities showing up in the top-line revenue and corresponding statistics. This data joins other types of data from other applications like time and attendance, or sales and catering. It shows up in the morning flash report, daily operating report, and continues to the monthly financial statement.

All of this data begins its life in applications like your property management system (PMS) or your point-of-sale system (POS). While there it is being used by front-line staff at the front desk, restaurants and other guest-facing areas, it’s also critical real-time data for departments behind the scenes like the kitchen or housekeeping. These applications are the tools we use to manage our businesses dynamically.
 
Soon the data begins to wind its way through a variety of stopping points and diversions on its journey to a financial statement. Of course, night audit is usually the first stop. Balancing revenues and settlements with updates to various ledgers is a key check and balance ensuring data integrity. Once the data has been balanced someone executes the day end/date roll process. This can also be the time when this data starts getting shared with other systems through interfaces.

Speaking of interfaces, how does the data balanced by night audit make it into the general ledger? If any part of your answer involves taking data from a system report and entering it into a spreadsheet, then you have already lost the battle. The journey your data has to travel has now been subjected to the risk of becoming inaccurate. Try revisiting the basic configuration if there is not an electronic handoff from one system into the next.

The journey data follows could be described as having four levels to it. At each of these levels there are potential obstacles ready to interrupt the smooth flow of data. Be proactive by understanding who the audiences are at each level and how the data is delivered. Is it presented in easily digested formats? Can all the data be tied back to the source applications?

Think of all the key applications being used in the hotel today. Many of them are revenue systems such as PMS, POS and S&C. Then there are several administrative systems such as timekeeping, procurement and HRIS. They all have one very important thing in common. These are the applications that represent the starting point of a piece of data which could one day be part of a board presentation. If one of these applications is not working it is very likely customer service, employee morale or both will be impacted.

The data in these systems start to show up in reports at the instant a transaction happens. Some reports have very granular levels of detail and come right out of the application. Think of the POS menu analysis where you would find out the number of steaks sold last night. At subsequent levels on its journey, data becomes more condensed and summarized.  These “stops” along the way are usually evidenced by a certain set of reports and key consumers of the information.
 
Level one reports are usually the onboard reports included in these key applications. These reports have access the highest level of detail possible from the application. The primary users of these reports are department heads. For instance, the restaurant manager uses POS to capture revenues, monitor voids and a host of other administrative duties. The chef uses the same system to monitor which entrees are the highest sellers.

Level two reports represent the marriage of data from two separate systems, usually by way of an interface. For example, the PMS may have a group sales booking report which compares reservation activity against group block information from S&C. Likewise, the S&C application likely has a report showing the same block information sent to the PMS compared against reservation activity received from the PMS. Same data, different systems, shared automatically. How often does someone compare the two reports to see if they have the same totals? Reports from this level are often used by department heads and the senior leadership team in the hotel for immediate measurement of assumptions used in forecasting and budgeting. Accuracy is critical.

Level three is where the data becomes increasingly summarized, but it still relies on the same data maintaining a high level of integrity. The best example of a third-tier reporting system is the general ledger and it’s standard reporting. Another application and reports at this level would be a labor management application combining key volume measures from PMS and POS with timekeeping data to produce productivity reports. Many of the reports in this level are used by both the hotel management team and key individuals in the corporate office. 

Level four reports are the end of the journey. These reports have to be perfect! They include the highest level of refinement to all of the data originating in the applications we use every day. This set of reports includes full income statements, balance sheets and cash flows for each distinct entity in the organization. These reports are distributed to auditors for opinions and then shared with lenders and shareholders. Level four reports become the primary source for my presentation in the boardroom.

Try this simple test in your hotel. 
Our guest created data that hit a number of revenue centers and statistics. Almost immediately the data is parsed into market segments, meal periods, etc., before getting memorialized in the general ledger. It may also get shared with other applications and undoubtedly shows up in numerous reports being reviewed every day.

By the end of the month the data has accumulated on the daily report, the sales pace report, revenue management summaries and the profit and loss statement. In fact, some of the data may have also been shared to outside benchmarking firms like Smith Travel Research. Do all these reports have the identical information? Are you sure?  If not, what went wrong?

Data integrity is everyone’s responsibility. Financial management relies on accurate data presented in a meaningful way which informs key operating decisions. Waiting for data to be compiled from different printed reports into a spreadsheet is not only a timewaster, it means the information is not dynamic and could be subject to error.

Challenge your teams the next time you see a spreadsheet being used for financial reporting. Is there a reason your applications can’t talk to each other? Spreadsheets are an early indication of a workaround to overcome an application deficiency. Enlist the help of the application vendors to develop solutions and eliminate the need for workarounds. I compare the use of spreadsheets in data flow to sausage making. The end product rarely resembles its origin.

Keep it clean. Keep it direct. Keep it out of Excel.

Ron Strecker is the chief financial officer for the Al J. Schneider Company.